from: http://www.realclearmarkets.com/art...s_officially_been_put_out_of_mind_102603.html Jeffrey Snider March 24, 2017 During the middle 2000’s when Alan Greenspan’s Fed endeavored to change the outward monetary policy stance to “tightening”, it was not unusual for some divergences to have emerged. One of those was between the federal funds rates, either target or effective, and Treasury bill equivalent yields. Under a hierarchical system, this was not unexpected or alarming except as when the distance between them became unusually large (2006). Federal funds are unsecured interbank transactions whereas Treasury bills are near equivalent to them except secured by lending cash to the federal government. One would expect bill rates to be some degree less than federal funds. And so they are again in 2017 as the Fed embarks on another so-called tightening regime... ...What made the Great Depression was both its catastrophic downturn while also the lack of recovery following it; the 1920-21 Depression, by contrast, was nearly as severe in its contraction but left no lingering impression beyond the downturn. Before the 1930’s, the name Great Depression was given to the later 19thcentury in the US but more so Europe. It remains to this day a controversial and argued subject, largely because it has become embroiled in political considerations as much as economic ones. As Milton Friedman and Anna Schwartz wrote in A Monetary History: “Though declining prices did not prevent a rapid rise in real income over the period as a whole, they gave rise to serious economic and social problems. The price declines affected different groups unevenly and introduced additional elements of uncertainty into the economic scene to which adjustment was necessary.” The Long Depression, as it is sometimes called, is often filtered through the lens of gold... ...Using 1896 as the ending date is also ironic in that it was the election of William McKinley that ultimately settled the monetary debate of the era – the US would be committed fully to the gold standard... ...a few months into what would become the Panic of 1893, bringing with it the second great contraction in the US of the Long Depression, President Grover Cleveland said: “At times like the present, when the evils of unsound finance threaten us, the speculator may anticipate a harvest gathered from the misfortune of others, the capitalist may protect himself by hoarding or may even find profit in the fluctuations of values; but the wage earner - the first to be injured by a depreciated currency and the last to receive the benefit of its correction - is practically defenseless.” Indeed, some estimates put the unemployment rate at 3% in 1892 but 18.5% by 1984. But what Cleveland said was not merely applicable to that one cycle, or even how that single cycle might situate in the Long Depression. It is a timeless stamp of monetary instability. The symptoms of that are easily identifiable, as are its burdens. And in his address on the repeal of the Sherman Silver Act that year, President Cleveland, a Democrat but not a populist one like Bryan (in those days populism at least in the US meant for government intervention in money through silver, the agitation), further said: “The people of the United States are entitled to a sound and stable currency and to money recognized as such on every exchange and in every market of the world. Their government has no right to injure them by financial experiments opposed to the policy and practice of other civilized states, nor is it justified in permitting an exaggerated and unreasonable reliance on our national strength and ability to jeopardize the soundness of the people’s money.” It would be, again, left to McKinley, a Republican, to act out what Cleveland proposed against Bryan’s silver platform of 1896. Only then did the Long Depression end in the US, though it may have continued until, and contributed toward, World War I elsewhere... ...The global economy had in 2015 and early 2016 taken another big step back (or two), leaving no longer any doubt that the Great “Recession” was a full rupture rather than a recession. The race among central bankers is on to figure out why, though in reality it had already started ten years ago with no special powers required to figure out... ...it is the sudden lack of labor utilization, a deficiency from which so-called safety nets have only been partially successful in mitigating. Unlike the latter 19th century, the periods in between these monetary disruptions feature no rapid growth at all, leaving the global economy to languish with unstable slow growth, where each reinforces over time the other. The T-bill rate matters today in a way it didn’t ten years ago. It may be now that officially the recovery fantasy has been put out of mind that in some years distance the current age will become the resurrected argument of the Long Depression. And why not? With things as they are now even after ten years there is no sign of stability anywhere on the horizon; no McKinley’s on the R side to put into action the commitment of the Cleveland’s on the D side. We are stuck only with WJ Bryan’s on all sides, experimenting with a system they don’t understand or recognize. History never does repeat, but boy does it sometimes rhyme, right down to the perfect pace and inflections. * * * * * * * * * * * * * * * * * * * * * * * * * The original piece is good, but it's v e r y long and it's rancid in a detritus of obfuscation (it uses way too many big words). The above excerpt is a little easier to read but what it all boils down to it is that politics aside, the 'summer of recover' back in 2009 was a crock and more and more folks are quietly learning to deal w/ this reality. Any argument to the contrary has to exlain why the Fed was unable to raise rates until now.
I've seen almost no real recovery since 08, except of course in the stock market. We're currently experiencing the greatest bubble in centuries, thanks to bumbled Fed policy. The outcome will not be pretty.
I think the Fed policy you may be referring to is "quantitative easing" policy. Whereas the bailout was probably needed to prevent a worse crash, I think QE did nothing but increase the stock market (mainly a gift to the wealthy elite) at the expense of the national debt. And I agree, it's another bubble and it won't be pretty. It look possible that our home values, our savings, and our pensions may all be at grave risk. And what can be done but put everything into precious metals? Pensions? Forget saving them if they fail. Just remember, the problem is the type of economy we have. We need a new system.
I'm of the opinion that the bailout was completely unnecessary - the banks should have been allowed to fail or succeed, based on their own over-extension. We handed the government to the rich that month, and it's not coming back. Our economic system is fine, provided it's properly regulated. Sadly, for an uninformed populace, "no regulashuns" sounds like a great thing.
There has been real estate recovery in some markets. Nothing to write home about in most, but at least the slide was stopped. My city's sales tax collections have outpaced expectations for the last 2 or 3 years so that is good.
And somewhere in between or mixed is the fine line between thinking that the government should, or does, drive an economy, and thinking that private markets solely or mostly drive economies. I've been kicking this around on the mix end of the spectrum a lot lately. Which is weird, considering my political POV.
You mean that you've been told that government ****s everything up, and stops business from making money, but have come to realize that McDonald's and Exxon don't seem to give a single **** about your wellbeing? Better get back in line, buddy.
There's not really such a thing as an unregulated market. The real question is who does the regulating: the consumers via their choices to buy or not buy, or the government via its ability to force its will at gunpoint. I'm on the side of the consumers, myself.
Fully-informed consumers, sure. When's the last time you had access to all relevant information about something you bought?
The fact that a consumer chooses to buy something means they had all the relevant information they needed to make that choice. Information, like other commodities, has a price. More information costs more in terms of time, effort and other resources. It's a waste of these scarce resources to study how microchips work when deciding what kind of smart phone to buy, even though to be "fully informed" one might need to know that information. Of course consumers, at least, have the incentive to learn the relevant information because the choice they make will directly effect them. Voters, on the other hand, have no incentive to learn the relevant information about the issues. Their vote is only one out of very many, and has almost no influence on anything. If you are so worried about poorly informed people making decisions, then certainly you would be against government.
Absolute drivel. Look up ag-gag laws. Consider what kind of information you have about a doctor or hospital before you see them. Try to figure out where your car was actually made.
Again, knowing everything isn't relevant. You don't need to know where the metal for the springs in the car was mined to make a decision about buying or not buying. And using the medical field is a bad example because it's so highly regulated and subsidized, the incentives are all messed about. You keep asserting that consumers need to know things that aren't relevant to make decisions. Perfect knowledge is not necessary to make decisions about buying or not buying. The things that are important--for example price--are what the consumer will seek to learn. Voters, on the other hand, know almost nothing of the issues. How many voters know anything about foreign policy, or economics, or Constitutional law? Clearly if you think that people with low information cannot be trusted to make decisions, you must certainly be against government since the voting populace cannot be trusted to make such weighty decisions.
I'm against the loss of our Freedom Of Press, which led to this situation. A huge vote by uninformed and distracted morons, choosing between 2 nearly identical hand-picked candidates is completely useless. There's s reason that the things are always 51-49 now.
